New Zealand has an enviable record of farm innovation. Yet in the long-term, innovators often don’t reap the expected profit gains when they move a new crop or product from a niche position to the global mass market.
That may be because others have copied the innovation, entered the market and created an oversupply that depresses market price and profits - including those of the innovator.
One way to avoid this problem is to adopt a “hit-and-run” strategy. That, says University of Waikato economist Dr Steven Lim, allows the innovator to reap short-run profit gains before a market is oversupplied.
“The trick is to forecast when the oversupply will hit, and exit the market before this happens – even though prices may still be high,” he says.
A specialist on Asia’s emerging economies and a frequent consultant to the Asian Development Bank, Dr Lim will be speaking on strategies for investment in innovation at Fieldays this week.
The presentation by Dr Lim and three Waikato Management School colleagues is part of the University of Waikato Seminar Series, which focuses on this year’s Fieldays theme of innovation for future profit.
Dr Lim says innovators need to be aware of wider regional factors that can buffet local and international prices. “We recommend taking the big-picture view,” he says. “Innovators need to be thinking about trends in the entire Asia-Pacific market when they plan their business strategy.”
He says Kiwi farmers’ ability to control the gains from a crop innovation depends on the capacity of other countries to copy the innovation, and that capacity is continually developing.
Dr Lim will deliver his seminar at 10.30am on Wednesday 16 June upstairs in the Fieldays HQ Building at Mystery Creek.